Rich Ives is vice president of business insurance claims for Travelers Cos. Inc. Based in Hartford, Connecticut, Mr. Ives workers compensation sector for travelers, which is among the largest insurance companies in the country. He recently spoke with Assistant Editor Louise Esola about issues facing the industry. Edited excerpts follow.
What are some of the problems with inflation and its effect on workers’ compensation?
On the whole, the level of difficulty in the line of workers’ compensation has been benign, especially in the medical field. There are reasons for that; there are mechanisms in the workers’ compensation system that help control significant medical inflation, the largest of which are fee schedules. We know in the industry that fee schedules help control the rising medical costs of treating injured workers. These are updated annually, which means that the inflation effect is reduced on the health care costs of the work. However, we believe inflation within the workers compensation line will be a bigger problem in the future. There are five states specifically without fee schedules, and we̵7;re seeing higher medical inflation in those states right now, the reason being that there are fewer controls in those states to manage the cost of treatment for injured workers. And we believe that the same cost pressures that exist in these states will eventually work their way into the planned states over time.
Changes in the workforce are also a concern for the industry. What are some of the elements you see?
We see that a large portion of workers’ compensation losses come from individuals who are new to their role. According to our latest 2023 claims report, which we’re releasing this week, we found individuals while on the job in their first year, regardless of their age or industry experience, represent 34% (of claims activity) … and accounted for nearly 7 million lost work days due to of an injury. The other thing that is an important point for us here is that age can also be a factor, meaning that those who are injured less often than any other age group are those who are 60 and older, because that is a smaller part of the workforce. But we are seeing an aging workforce. Employees ages 60 and older had higher average costs per claim, totaling almost 15% more than employees ages 35 to 49, and about 140% more than those ages 18 to 24.
Mental well-being is also a concern. How has this affected compensation claims?
The mental wellbeing of the workforce continues to deteriorate, with employees struggling with issues such as anxiety and depression. We know from our data that factors unrelated to an individual’s injury, such as fear and unrealistic expectations or their lack of sleep or minimal social support, can prolong the recovery process. It can extend the recovery process by up to 50%. We also found that 40% of injured employees missing time from work experience one of these types of psychological or social barriers to recovery.
How is the industry dealing with this?
Some of this is not related to the work or to the injury. We will not pay for the treatment to treat these problems. But what we will do is provide helpful support and aids to mitigate these issues, as it has an impact on the overall bottom line. A good example would be, if we know someone is having a hard time, sometimes it’s just knowing that and giving a little more empathy in how we work with that person. And it’s about conversations or frequent touch points, or it’s a virtual visit, for example. It’s being able to really understand that person in their circumstances.